Politicians and policymakers can help raise awareness about climate change, but it’s affordable commercial solutions that will lead the charge against global warming
At previous UN climate change conferences, the world’s dignitaries and diplomats have sometimes flattered to deceive. Upbeat rhetoric has flowed freely enough, but substantive results and cast-iron commitments have been harder to come by.
So, when last year’s Paris talks concluded with a legal agreement to limit global temperature rises to just 1.5°C above pre-industrial levels, plans to hold governments to account, details of a regular review process, commitments to raise money to be invested in clean energy and the target of reaching net zero emissions in the second half of this century, many saw it as a sea change in ambition and international cooperation.
Taking part in a Royal Society panel discussion shortly after the conference, climate change expert Jeremy Leggett described it as “the most significant event in human history”. Barack Obama said it was “the best chance we have to save the one planet that we’ve got”. However, he and others were quick to note that the agreement wasn’t perfect. The president warned: “The problem’s not solved because of this accord.”
Indeed, the specific commitments made by individual countries are not thought to be sufficient on their own to keep temperature increases below 2°C, let alone the ambitious 1.5°C trumpeted in press releases.
According to Richard Youngman, CEO of the Cleantech Group, wiser heads will reserve judgment for a little while longer. “Paris changed the momentum to some degree,” he says. “But we’ll be better able to assess its impact over time – both over the coming months and in the longer term – five to 15 years.”
At home, the then UK Energy Minister Andrea Leadsom MP told Parliament in March that “the government believes that we will need to take the step of enshrining the Paris goal for net zero emissions in UK law. The question is not whether but how we do it”.
However, for now, the question of ‘when’ remains unanswered. One crucial factor in deciding the matter will be the arrival of ‘grid parity’ – the tipping point at which clean, renewable energy (initially, probably from solar) becomes cheaper than its traditional carbon-emitting antecedents.
Al Gore, who did so much to implant the issue of climate change in the global public consciousness with his ground-breaking TED talk a decade ago, has likened this to the difference between zero and one degree centigrade: “The difference between markets that are frozen up, and liquid flows of capital for investment.”
Making renewables pay
Gore’s theory – which seems a sensible one – is that if it becomes possible to offer clean, reliable sources of energy at a cheaper price than energy from sources that contribute to climate change, then harmful emissions would soon become a thing of the past. For industry, business, governments and individuals, the economic argument for clean energy would be sufficiently strong on its own.
Of course, grid parity or ‘solar singularity’, as it’s sometimes called, is a little way off yet. But there is cause for optimism. The cost of solar energy has come down by about 10% every year for the past 30 years, while the cost of using large lithium ion batteries – a crucial storage method – was around $1,400 per KWH in 2006, now it’s $200.
What’s more, ambitious companies such as Elon Musk’s Tesla Motors and SolarCity (a solar power company run by Musk’s cousins, Lyndon and Peter Rive) have given a glimpse of what might be possible as the technology evolves. Critics point out that both businesses are suffering unsustainable losses – Tesla lost an eye-watering $889 million last year – but both have also bullishly predicted that they will be profit-making by the end of this year. The staggering number of pre-orders for Tesla’s new Model 3 suggest that it might be about to turn the corner.
Microsoft founder Bill Gates said recently that it would be down to “private companies [to] ultimately develop these energy breakthroughs”. But he also stressed the need for cooperation, adding: “Their work will rely on the kind of basic research that only governments can fund. Both have a role to play.”
Gates’ contribution has been to team up with Facebook CEO Mark Zuckerburg and several other high-profile figures to set up the Breakthrough Energy Coalition – an organisation that will partner with governments and make “truly patient” investments in early-stage cleantech companies in order to spark a “new economic revolution”. The group launched in November 2015, but at the time of writing is yet to announce any investments.
For much of the British business community, UN climate change summits and ambitious plans announced by Silicon Valley billionaires seem rather detached from real life. Alex Betts, Managing Partner of Adaxia, a private equity house that specialises in resource efficiency, says: “Right now, I personally don’t think that [the Paris summit] is connected to the commercial world. Perhaps it’s in the minds of some of the more forward-thinking people in the corporate world, but I think most people are thinking about the here and now – the result of the EU referendum, for example.”
Betts says that while it might be possible to get firms to invest in schemes that save energy and, therefore, money, there is still a reluctance to step into the unknown. Figures from Bloomberg New Energy Finance show that a record $329 billion was invested in clean energy globally during 2015 – six times the total recorded in 2004 – but even for ambitious, well-equipped cleantech companies, funding remains difficult to come by.
Betts suggests that the private family offices of UHNWIs might be one important source of finance – Lord Stanley Fink, former CEO of the Man Group hedge fund, now supports an investment fund called Earth Capital Partners. Meanwhile, the British cleantech start-up Pavegen recently raised £2 million on the crowdfunding platform Crowdcube.
And there is evidence to suggest more companies are finding ways to align commercial and environmental opportunities. Buffalo Grid is a British business that provides mobile power and internet services to people in areas of developing countries that aren’t served by traditional grid power.
Its founder, Daniel Fogg, is unabashed about its potential to make money (the number of people in India without access to grid power exceeds the entire population of the US).
But he notes that the company’s success would bring about “moral benefits”, not only by providing electricity and internet services to people who need them, but also by helping parts of the developing world to ‘leapfrog’ methods of energy generation that emit significant amounts of carbon. “We’ve seen people skip landlines and go straight to mobile, and skip PCs and go straight to smartphones,” says Fogg. “We could see something similar with power.”
However, Fogg’s optimism is tempered with realism. “We need to do more and it needs to be better coordinated,” he says. “It needs to be a combination of government and private-sector solutions. But I think part of the reason that Elon Musk and SolarCity have been so successful is because they have put the choice directly into the hands of the consumer and said: ‘Would you like to solve this problem yourselves, or are you going to wait for your government to catch up?’ People will switch – if they can afford to.”
The Cleantech Group’s Richard Youngman intends to remain “hopeful, but appropriately sceptical”, in the wake of the Paris summit. The real test will come when politicians are confronted with other problems – from terrorism, to macroeconomics and elections. “The worry,” he adds, “is that climate change will be put off, because it’s not ‘this year’s problem’.”
If that happens, the very best we can hope for is that we’re left with an even bigger mountain to climb.